Tuesday, March 07, 2006

Take-Two Earnings Announcement

Excerpted from TheStreet.com
The video-game software publisher and maker of the popular Grand Theft Auto franchise reported that a year-ago profit had turned into a burgeoning loss in its first quarter, thanks in part to a 47% drop in sales. The company didn't immediately give a specific forecast for coming quarters, but said it didn't expect to return to profitability until the fourth quarter of its current fiscal year...

In the quarter ended Jan. 31, Take-Two lost $29.1 million, or 41 cents a share, on sales of $265 million. In contrast, in the year-earlier period, the company earned $55.2 million, or 79 cents a share, on sales of $502.5 million...

Analysts polled by Thomson First Call were expecting the company to lose about 16 cents a share, or 11 cents a share excluding options costs, on sales of $237.2 million. In January, Take-Two projected sales of $230 million to $250 million for its fiscal first quarter, but declined to predict earnings for the period.

I don't think Take-Two has enough cash to wait until the fourth quarter to "return to profitability." I'd look for some kind of buyout by the end of the year.

The question is--who wants them? Plenty of companies would be interested in the brands they've acquired (which have generally been excellent), and Grand Theft Auto is a monster, but the open question is how many bodies are buried in the books and what the auditing process would discover. I still think someone will buy them, but it might wind up being for less than people expected.

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